Builders Selling Small Number of Super Luxury Apartments are Fringe Players Nationally!

If every national real estate player starts their apartments at 60 lakhs – they are not a national real estate company. They are a fringe player in the Indian economy.

As per World Bank data 80% of Indian earn less than $2 per day. Also, 33% of Indians earn less than $1 per day.We need housing solutions that can cover needs of a vast majority of people.Families (not people) earning over 5 Lakhs per annum are small fraction of 1% of the population.

Only a Hindusthan Unilever that offers a wide variety of soaps for every segment of society can be called a National player.Does not matter how sexy the offices are of DLF, Unitech, Maytas and the endless ‘Big names of Indian Real Estate’. These companies are only fringe players in the Indian economy.These companies are not an equivalent of aMS Dhoni or Kapil Dev – They are like some key player from some local school somewhere in Delhi.Does not matter how much your dad (your business) advertises in the papers and what your stock price is.

Only if you can build something like 1 lakh apartments covering all segments of the population (who can buy) – you have a right to be called a national player like an Airtel or an Hindusthan Unilever. There are 80% of India that can probably not buy any modern construction. However you should atleast be able to provide housing solutions for the rest including people like clerks in government department, Sr. sales executive with 10 years experience in a Bata shoe store, an engine driver with Indian Railways and a traffic constable.

I dont understand what is the big deal in building fancy housing for 0.01% of Indian population. This satisfied the years of latent demand created for housing due to the job creation done mostly by IT offshoring industry. The recent push by the Government and incentives including classification of loans below 20 Lakhs as priority sector lending are very welcome. However, we need to understand that a house is a ‘manufactured good’.

The Indian Real Estate Industry is ‘Primitive’ till the time we can mass produce at least 10 lakh of functional, decent homes per year that provide hygeinic living conditions and create decent neighborhoods. Let me illustrate this with an example – If the Indian army had a few thousand soldiers with modern arms and while the balance several lakh soldiers carried bows and arrows. Nobody would consider such an army as a modern. It will be called a primitive army. Similarly, the Indian real estate industry has a very long way to go. At this time, they have a small number of localized successes. No single company has been able to manufacture what is required from the Indian market.

In 1947, one real estate entrepreneur called William Levitt (Levitt & Sons, Inc) built 17,000 homes in a single development covering 18.7 sq kms. This was done in 4 years and the new town was called Levittstown as a suburb of New York city. People can commute conveniently by taking a local train to Manhattan for work.

60 years later there have been dramatic advances in construction technology, methods and management. Plus, we already know others have constructed large numbers of affordable houses in various parts of the world. The sad story is there is no capable real estate entrepreneur in India. This is despite a huge demand for affordable housing. We desperately need a hero in Housing industry. Someone like what Kishore Biyani was for Indian Retailers or Sunil Mittal or Dhirubhai Ambani was for Cell Phones. Any one listening ?

2 Responses to “Builders Selling Small Number of Super Luxury Apartments are Fringe Players Nationally!”

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